US: Wall St slides after China's surprise currency devaluation

[NEW YORK] US stocks declined broadly on Tuesday as China's devaluation of its yuan currency hit companies with a big exposure to the world's No. 2 economy and added to worries about the global economic outlook.

Apple Inc shed 5.2 per cent to end at US$113.54 in its biggest daily percentage decline since January 2014, making the stock the biggest drag on all three major US indexes. Jefferies also raised concerns about the demand for the iPhone, primarily in China.

Among other companies with big exposure to China, Caterpillar was down 2.6 per cent at US$78.04 and Yum Brands dropped 4.9 per cent to US$83.54. General Motors shares lost 3.5 per cent to US$30.83, though it said the devaluation of the yuan would have a "limited and manageable" impact on its business.

The Dow Jones industrial average fell 212.33 points, or 1.21 per cent, to 17,402.84; the S&P 500 index lost 20.11 points, or 0.96 per cent, to 2,084.07 and the Nasdaq Composite dropped 65.01 points, or 1.27 per cent, to 5,036.79. "Obviously, this devaluation seems to suggest there's a lot of weakness, and we're in thinly-traded markets right now," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. "To a certain extent, the stocks that have propped up the market this year have slowly fallen out of favor, so I think that you're seeing a little bit of a flight to safety." The sudden currency adjustment by the world's top metals consumer pushed copper and aluminum to six-year lows, and the S&P materials index dropped 1.9 per cent, leading S&P 500 sector declines. Freeport-McMoRan slid 12.3 per cent to US$10.22.

Crude oil futures in New York ended at a more than six-year low.

Meanwhile, US Treasury debt prices jumped following the devaluation news.

China's yuan currency fell to its lowest against the dollar in three years following what the country's central bank described as a "one-off depreciation." Shares of Chinese e-commerce company Alibaba dropped 3.9 per cent US$77.34.

The day's stock market declines followed a rally on Monday that gave the S&P 500 its biggest increase since May.

Among the day's gainers, Google rose 4.1 per cent to US$690.30 after it said it would overhaul its operating structure.

After the bell, shares of General Electric edged up 0.4 per cent after it said it would sell its US healthcare finance unit and US$8.5 billion of healthcare-related loans to Capital One Financial Corp. GE shares ended the regular session down 2 per cent at US$25.71.

Declining issues outnumbered advancing ones on the NYSE by 1,932 to 1,152, for a 1.68-to-1 ratio; on the Nasdaq, 1,967 issues fell and 848 advanced, for a 2.32-to-1 ratio favoring decliners.

The S&P 500 posted 10 new 52-week highs and 17 new lows; the Nasdaq recorded 40 new highs and 104 new lows.

About 7.1 billion shares changed hands on US exchanges, compared with the 6.9 billion daily average for the month to date, according to data from BATS Global Markets.

REUTERS